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India charging fees for cash and digital payments

Categories : Cash is a public good, Cash is trust
June 16, 2017
Tags : ATM, Cash, Cost of transactions, Costs of payments, India
Despite forcing its citizens to adopt digital payments, these will also be charged taxes and fees when used. SBI is implementing fee for all payment methods, but especially for mobile ones.
Communication Team / Equipo de Comunicación

The Indian government does not leave the slightest respite to Indian citizens. After the removal of 86% of the currency in circulation last November, the State Bank of India (SBI) has just introduced additional service taxes for ATM and mobile transactions. But if that might be a logical step to encourage consumers to increasingly use digital payments, what’s not clear is why these fees also concern online banking services, leaving no viable option to SBI customers.

Since June 1st 2017, additional taxes of Rs 10 ($0.1) are charged for cash withdrawals carried out at SBI ATMs, to Rs 20 on transactions conducted at cash machines provided by other banks. Cash purchases done via SBI mobile banking app and State Bank Buddy – a mobile app that allows for money transfers between contacts – are for their part charged Rs 25 per transaction.

But the bank’s determination to fight against mobile cash transfers does not end there. Cash deposits of up to Rs 10,000 ($155) into mobile wallet SBI Buddy are now charged 0.25% of the loaded amount. It is even worst for SBI Buddy cash withdrawals, charged 2.5% of the transaction value. IMPS (Immediate Payment Service) transfers do not escape the new regulation and are also charged more since the beginning of the month. 

The icing on the cake: Indians wishing to exchange more than 20 pieces of soiled notes at the bank (or a value exceeding Rs 5,000) will have to pay a fee of Rs 2 per banknote, plus tax service.

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